Please, just give me a second. I have to adjust to a not so new market reality. Does anyone remember the “Whipsaw Effect,” a move the market perfected some time ago, but put on hold for a few months? This morning’s move in the market reminds me of the oft-quoted line from one super-silly horror movie. “I’m baaack.” Oh, wait, I just got another head rush and another line from another movie came to me – “Eil be bawk.” Both characters were clearly stating their intention to create future mischief, just as the market is clearly stating it is not as ready to settle in as it led us to believe this January. This brings to mind another point, one that we all can relate to, I am sure – a person in your life that you just can’t escape.
When I lived in the Sierras, skiing in the winter was a fact of life. The night before at work, my group of friends would often talk about where we would ski the next day, where the best snow was. Sometimes, someone we worked with, someone we didn’t really want to hang out with would over hear us. The next day, that person would show up to ski with us. Well, since we liked our little group and we didn’t like him, the plan was to ski away from the interloper, “ditch him,” so to speak. Good plan, bad execution, as it seemed no matter where we went or how fast we skied, we could not escape the presence of the unwanted person …
This is how many folks feel about the U.S. ratings agencies, especially today as discredited S&P is signaling another possible downgrade of U.S. creditworthiness. It reminds me of a line from a rather funny song, “How can I miss you if you won’t go away?” Finally, though, an entity is taking a stand, making a move that could marginalize the ratings agencies, and, if we are lucky, make them go away …
Plans to launch a European ratings agency [non-profit] to compete with S&P, Moody’s and Fitch are at an advanced stage and a new private institution could start business as soon as the first half of this year. The plan for the new agency has received signals of support from the European Commission and governments in Europe but also in China and among some Arab states.
You bet a new ratings agency, one that cannot profit from its own services, is receiving support from around the world. I think everyone is darn sick of looking to our left, to our right, behind us, and seeing that unwanted “person” continuing to dog the market. It is about time. I wish the new agency all the best.
Speaking of unwanted, it seems we just can’t get away from Greece and now Portugal. It seems they have become the symbols of the European fiscal mess, and although we don’t hear much about Portugal, it is clear the country is teetering on the brink, as is Greece. As much as Europe would like, it simply can’t ditch them, so downhill we all go, seemingly faster and faster.
Oh, don’t fret. It just sounds as if I am losing my optimism. I really haven’t. I still believe the stakes are so high that all the parties will pull all the European problems into one clarified resolution, a resolution consisting of many parts, but a satisfactory resolution nevertheless. The stakes are simply too high, and when it is clear that each of the parties has wrung out all the concessions they can in the negotiations, the deal will get done, and fairly soon.
Trade in the day – Invest in your life …
